Property prices to increase more slowly than people’s pay, says Zoopla

The property website says the typical house price is still almost £20,000 above affordability levels.

A residential street of Victorian-style terraced houses in London
(Image credit: Alex Robinson Photography via Getty Images)

Property prices will increase more slowly than people’s pay over the next two years, according to Zoopla, but the typical house price is still almost £20,000 above affordability levels.

The property website says rising incomes and longer mortgage terms will help improve affordability but that the gap between what people can afford and what they can buy runs into the tens of thousands of pounds.

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A typical household rolling off a fixed-rate mortgage before the end of 2026 is due to face a jump of around £180 a month, the Financial Policy Committee report suggested. Higher mortgage rates have resulted in many households and renters reducing their savings, the BoE also found.

Will the Bank of England cut interest rates in August? 

Barring any economic shocks, interest rates have peaked. The question now is how long the Bank of England will hold rates at 5.25%. The Bank of England has four remaining meetings this year, with the next announcement due to take place on 1 August. 

Over the past few months, we have seen the MPC start to turn – however it remains visibly divided. In April’s meeting, one committee member voted for a rate cut. This increased to two committee members in May and June. 

The prospect of an August rate cut largely depends on what emerges in June’s CPI and labour market reports. In May, core and services inflation came in at 3.5% and 5.7% respectively – still too hot for the MPC’s liking. 

Wage growth (another big driver of inflation) is still coming in hot at 6%, although the MPC noted that data challenges with the ONS Labour Force Survey made it “difficult to gauge the evolution of labour market activity”. 

According to a recent poll from Reuters, economists are still hopeful when it comes to a summer rate cut. Sixty-three out of 65 economists voted for August as the most likely month for a first reduction to the base rate. The two who disagreed with consensus opted for September. 

Chris Newlands

Chris is a freelance journalist, and was previously an editor and correspondent at the Financial Times as well as the business and money editor at The i Newspaper. He is also the author of the Virgin Money Maker, the personal finance guide published by Virgin Books, and has written for the BBC, The Wall Street Journal, The Independent, South China Morning Post, TimeOut, Barron's and The Guardian. He is a graduate in Economics.